Collective Mining Ltd. — Management Reports 2021

Feb 17, 2021

POCML 5 INC.

(a Capital Pool Corporation)

Management's Discussion and Analysis

For the Period Ended: December 31, 2020

Date of Report: February 12, 2021

This management's discussion and analysis of the financial condition and results of operation ("MD&A") of POCML 5 Inc. ("POCML" or the "Company") should be read in conjunction with POCML's audited financial statements and notes thereto for the year ended December 31, 2020 and December 31, 2019.

Results are reported in Canadian dollars, unless otherwise noted. All financial data in this MD&A has been prepared in accordance with International Financial Reporting Standards ("IFRS") issued by the International Accounting Standards Board ("IASB") and interpretations of the International Financial Reporting Interpretations Committee ("IFRIC").

Caution Regarding Forward-Looking Information:

Certain information contained in this MD&A constitutes forward-looking information, which is information regarding possible events, conditions or results of operations of the Company that is based upon assumptions about future economic conditions and courses of action and which is inherently uncertain. All information other than statements of historical fact may be forward-looking information. Forward-looking information is often, but not always, identified by the use of words such as "seek", "anticipate", "budget", "plan", "continue", "estimate", "expect", "forecast", "may", "will", "project", "predict", "potential", "targeting", "intend", "could", "might", "should", "believe" and similar words or phrases (including negative variations) suggesting future outcomes or statements regarding an outlook. Forward-looking information contained in this MD&A includes, without limitation, our expectations regarding anticipated investment activities and results and financing activities, the impact of changes in accounting policies and other factors on our operating results, and the performance of global capital markets and interest rates.

Forward-looking information involves known and unknown risks, uncertainties and other factors that may cause actual results or events to differ materially from those anticipated in such forward-looking information. The Company believes the expectations reflected in the forward-looking information are reasonable but no assurance can be given that these expectations will prove to be correct and readers are cautioned not to place undue reliance on forward-looking information contained in this MD&A. The forward-looking information contained in this MD&A is provided as of the date hereof and the Company undertakes no obligation to update publicly or revise any forward-looking information, whether as a result of new information, future events or otherwise, except as otherwise required by law. All of the forward-looking information contained in this MD&A is expressly qualified by this cautionary statement.

Selected forward-looking statements, assumptions, and risk factors are as follows:

Forward-looking statements	Assumptions	Risk factors
The Company proposes to worktowards completing a Qualifyingtransaction.	The Company expects to identifyan asset or business to acquireand close a QualifyingTransaction, on terms favourableto the Company.	The Company's inability to finda target, the inability to satisfyall of the conditions precedent(due diligence, shareholderand regulatory approval,financing) to complete a

		Qualifying Transaction,resulting in the Companyremaining as a public shell.
The Company's ability to meetits working capital needs at thecurrent level for the twelvemonth period ending December31, 2021.	The operating activities of theCompany for the twelve-monthperiod ending December 31,2021, and the costs associatedtherewith, will be consistent withthe Company's currentexpectations; debt and equitymarkets, exchange and interestrates and other applicableeconomic conditions arefavourable to the Company.	Changes in debt and equitymarkets; timing and availabilityof external financing onacceptable terms; increases incosts; regulatory complianceand changes in regulatorycompliance and other locallegislation and regulation;interest rate and exchange ratefluctuations; changes ineconomic conditions; ongoinguncertainties relating to theCOVID-19 virus.

Nature of the Business and Incorporation:

POCML was incorporated under the Business Corporation Act (Ontario) on February 21, 2018 and is classified as a Capital Pool Company, as defined in the Policy 2.4 of the TSX Venture Exchange (the "Exchange"). The Company's continuing operations, as intended, are dependent on its ability to secure equity financing with which it intends to identify and evaluate potential acquisitions of businesses, and once identified and evaluated, to negotiate an acquisition thereof or participation therein subject to receipt of regulatory and, if required, shareholders' approval.

The Company's continuing operations as intended are dependent upon its ability to identify, evaluate and negotiate an acquisition or business, or an interest therein. Such an acquisition will be subject to the approval of the regulatory authorities concerned and, in the case of a non-arm's-length transaction, of the majority of the minority shareholders.

The Company is domiciled in the province of Ontario, Canada and the head office and the registered head office of the Company is located at 130 King Street West, Suite 2210, Toronto, Ontario M5X 1E4.

The Company currently has one employee, David D'Onofrio, who is the Chief Executive Officer, Chief Financial Officer, Secretary and a Director of the Company.

Operational Highlights

The Company has no revenues, so its ability to ensure continuing operations is dependent on it completing a Qualifying Transaction. At December 31, 2020, the Company had a net working capital of $488,564 (December 31, 2019 – $489,596). The Company has cash of $496,881 (December 31, 2019 – $495,485). Working capital and cash and cash equivalents increased during the twelve months ended December 31, 2020 due to cash received on options exercised during the twelve months ending December 31, 2020.

The Company has sufficient capital to meet its ongoing operating expenses and continue to meet its obligations on its current projects for the twelve-month period ending December 31, 2021. Management may increase or decrease budgeted expenditures depending on ongoing volatility in the economic environment. See "Liquidity and Capital Resources" below.

On November 30, 2020 the Company announced that it has entered into a binding agreement dated November 30, 2020 (the "Letter Agreement") with an arm's length, Ontario based mineral exploration company that holds exploration stage assets in South America (the "Target") to effect a business combination of the two companies (the "Proposed Transaction"). The Proposed Transaction will be a reverse takeover of the Company by the Target and its shareholders.

The Company is a Capital Pool Company ("CPC") and intends the Proposed Transaction to constitute its Qualifying Transaction (the "Qualifying Transaction") under the policies of the Exchange.

It is currently anticipated that the Proposed Transaction will be effected by way of a three-cornered amalgamation, share exchange, merger, amalgamation, arrangement or other similar form of transaction as is acceptable by the parties.

On or immediately prior to the completion of the Proposed Transaction, it is anticipated that: (i) the Company will effect a name change to such name as may be determined by Target; and (ii) the Company will consolidate the issued and outstanding common shares in the capital of the Company (the "POCML5 Shares") on the basis of one "new" POCML5 Share for every four "old" POCML5 Shares issued and outstanding (the "Consolidation").

Pursuant to the Proposed Transaction, holders of the issued and outstanding common shares of the Target (the "Target Shares") will receive one POCML5 Share (as they exist on a post-Consolidation basis) for each Target Share held (the "Exchange Ratio"). Pursuant to the Proposed Transaction, all existing securities convertible into Target Shares shall be exchanged, based on the Exchange Ratio, for similar securities to purchase POCML5 Shares on substantially similar terms and conditions.

There are currently an aggregate of 10,140,000 POCML5 Shares issued and outstanding, as well as 1,000,000 stock options, each exercisable to acquire one POCML 5 Share at an exercise price of $0.10. In connection with the Proposed Transaction, all outstanding unexercised stock options of POCML5 shall expire immediately prior to the completion of the Proposed Transaction.

If the Proposed Transaction is completed, it is anticipated that the board of directors of the Company shall be reconstituted to consist of such directors as the Target shall determine, subject to the minimum residency requirements of the Business Corporations Act (Ontario), and all existing officers of the Company shall resign and be replaced with officers appointed by the new slate of board of directors.

The Proposed Transaction is conditional upon the completion of a financing and receipt of shareholder and regulatory approval.

Further details about the Proposed Transaction can be found in the POCML 5 press release dated November 30, 2020 available on SEDAR at www.sedar.com.

Trends

The Company plans to continue to search for suitable assets or businesses to acquire or merge with in order to maximize value for shareholders. Management regularly monitors economic conditions and estimates their impact on the Company's operations and incorporates these estimates in both short-term operating and longer-term strategic decisions. Strong equity markets are favourable conditions for completing a public merger or acquisition transaction.

Due to the worldwide COVID-19 pandemic, material uncertainties may arise that could influence management's going concern assumption. Management cannot accurately predict the future impact COVID-19 may have on:

• The severity and the length of potential measures taken by governments to manage the spread of the virus, and their effect on labour availability and supply lines;

• Availability of government supplies, such as water and electricity;

• The ability to complete a RTO;

• Purchasing power of the Canadian dollar; and

• Ability to obtain funding.

At the date of this MD&A, the Canadian federal government and the provincial government of Ontario have not introduced measures that have directly impeded the operational activities of the Company. Management believes the business will continue and accordingly, the current situation has not impacted management's going concern assumption. However, it is not possible to reliably estimate the length and severity of these developments and the impact on the financial results and condition of the Company in future periods.

Apart from these and the risk factors noted under the heading "Risk Factors", management is not aware of any other trends, commitments, events or uncertainties that would have a material effect on the Company's business, financial condition or results of operations.

Results of Operations – Three months ended December 31, 2020

The Company recorded a net loss and comprehensive loss of $7,155 during the three months ended December 31, 2020 compared to a net loss of $5,058 for the three months ended December 31, 2019. The increase was mainly due to a increase in public reporting and listing costs.

The net loss for the three months ended December 31, 2020 is represented by the following expenses incurred in the period:

Operating, general and administrative	$2,467
Professional fees	$5,000
Interest income	$(312)
	$7,155

The Company, during the three month period ended December 31, 2020, incurred expenses related to ongoing administration.

Results of Operations – Year ended December 31, 2020

The Company recorded a net loss and comprehensive loss of $15,032 during the year ended December 31, 2020 compared to a net loss of $11,209 for the year ended December 31, 2019. The increase was mainly due to a decrease in interest income.

The net loss for the year ended December 31, 2020 is represented by the following expenses incurred in the period:

Operating, general and administrative	$11,673
Professional fees	$5,885
Interest income	$ (2,526)
	$15,032

The Company, during the year ended December 31, 2020, incurred expenses related to ongoing administration, as well as listing and filing fees all relating to the Company's listing on the Exchange and included in Office and general (see information elsewhere in this MD&A).

Liquidity and capital resources

As at December 31, 2019, the Company had cash of $495,485, and as of December 31, 2020, the Company had cash of $496,881. The increase in cash from the previous period was primarily due to cash received on options exercised during the twelve months ending December 31, 2020.

As of December 31, 2019 the Company had total liabilities of $5,889, and as at December 31, 2020 had total liabilities of $8,317. The increase in liabilities was primary due to a increase in accounts payable & accrued liabilities.

Shareholder equity decreased to $488,564 as at December 31, 2020 (December 31, 2019 - $489,596).

Quarterly Finanical Results

Quarter Ended	Revenue	Income / (Loss)	Income/ (Loss)per share
December 31, 2020	-	(7,155)	(0.01)
September 30, 2020	-	3,299	0.01
June 30, 2020	-	(5,939)	(0.01)
March 31, 2020	-	(5,237)	(0.01)
December 31, 2019	-	(5,058)	(0.01)
September 30, 2019	-	(593)	(0.01)
June 30, 2019	-	(2,802)	(0.01)
March 31, 2019	-	(2,756)	(0.01)

Segmented Information

The Company has a single reportable geographic segment – Canada – and all of the Company's assets are located in Canada.

Off-Balance Sheet Arrangements

The Company has no off-balance sheet arrangements.

Investor Relations

During the year ended December 31, 2020, the Company's management handled the Company's investor relations activities.

Outstanding Share Capital as at December 31, 2020

• (a) Authorized Unlimited number of common shares Unlimited number of special shares
• (b) Issued 10,140,000 common shares $621,415

On December 10, 2018, the Company completed an initial public offering of 2,000,000 common shares at $0.10 per share for gross proceeds of $200,000 pursuant to a prospectus dated October 26, 2018. The Company paid cash commission and other expenses of $16,576 and also issued 140,000 agent options to the registered agent. Each agent option entitles the holders to purchase the common shares at a price of $0.10 per common share until December 10, 2020.

Under the agency agreement, the Company granted to the agent the option to purchase 140,000 common shares at a price of $0.10 per common share until December 10, 2020. In addition, the Company paid a commission of $14,000, representing 7% of the aggregate gross proceeds of the offering to the agent as compensation for acting as agent, and a corporate finance fee of $10,000.

The cash raised from its initial public offering will be primarily used to pursue a qualifying transaction.

During the twelve months ended December 31, 2020, 140,000 common shares were issued from options exercised at an average of $0.10 per common share, with fair value of $7,415 being reallocated from contributed surplus to share capital respectively.

(c) Escrowed shares:

On August 30, 2018 the Company issued 8,000,000 common shares at $0.05 per share for total proceeds of $400,000.

The issued and outstanding common shares will be held in escrow pursuant to the requirements of the Exchange to be released as to 10% thereof on the completion of the Company's Qualifying Transaction, as defined in the policies of the Exchange, and as to 15% thereof on each of the 6th, 12th, 18th, 24th, 30th and 36th months following the initial release.

All common shares acquired on exercise of stock options granted to directors and officers prior to the completion of a Qualifying Transaction, must also be deposited in escrow until the final exchange bulletin is issued.

All common shares of the Company acquired in the secondary market prior to the completion of a Qualifying Transaction by a Control Person, as defined in the policies of the Exchange, are required to be deposited in escrow. Subject to certain permitted exemptions, all securities of the Company held by principals of the resulting issuer will also be escrowed.

Transactions with Related Parties

Related parties include the Board of Directors, close family members and enterprises which are controlled by these individuals as well as persons performing similar functions.

There was no related party transactions for the year ended December 31, 2020.

Financial Instruments

The carrying values of cash, amounts receivable, and accounts payable and accrued liabilities approximate fair value due to the relatively short term maturities of these instruments.

Management of Capital

The Company's objective when managing capital is to maintain its ability to continue as a going concern in order to provide returns for shareholders and benefits for other stakeholders.

The Company includes equity, comprised of issued common shares and deficit, in the definition of capital.

The Company's primary objective with respect to its capital management is to ensure that it has sufficient cash resources to fund the identification and evaluation of potential acquisitions. To secure the additional capital necessary to pursue these plans, the Company may attempt to raise additional funds through the issuance of equity or by securing strategic partners.

The proceeds raised from the issuance of common shares may only be used to identify and evaluate assets or businesses for future investment, with the exception that not more than the lesser of 30% of the gross proceeds from the issuance of shares or $210,000 may be used to cover prescribed costs of issuing the common shares or administrative and general expenses of the Company. These restrictions apply until completion of a Qualifying Transaction by the Company as defined under the Exchange policy 2.4.

Contingency

There is no assurance that the Company will identify a business or asset that warrants acquisition or participation within the time limitations permissible under the policies of the Exchange, at which time the Exchange may suspend or de-list the Company's shares from trading.

Risk Disclosures and Fair Value

The Company's financial instruments, consisting of cash, amounts receivable and accounts payable and accrued liabilities approximates fair value due to the relatively short term maturities of the instrument. It is management's opinion that the Company is not exposed to significant interest, currency or credit risks arising from these financial instruments.

Outlook

Management believes the Company is well positioned to complete a qualifying transaction. The Company believes that it has sufficient cash and capital resources.

Emerging Risk

The global outbreak of COVID-19 (coronavirus) has had a significant impact on businesses through the restrictions put in place by the Canadian, provincial and municipal governments regarding travel, business operations and isolation/quarantine orders. At this time, it is unknown the extent of the impact the COVID-19 outbreak may have on the Corporation as this will depend on future developments that are highly uncertain and that cannot be predicted with confidence. These uncertainties arise from the inability to predict the ultimate geographic spread of the disease, and the duration of the outbreak, including the duration of travel restrictions, business closures or disruptions, and quarantine/isolation measures that are currently, or may be put, in place by Canada and other countries to fight the virus.